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Today's news...39/05

MARCH 09, 2005 -- Adidas-Salomon 2004 Sales Rose 7%

In 2004, currency-neutral sales for the Adidas-Salomon Group grew 7%. In euros, sales grew 3% to reach EUR 6.478 billion in 2004 compared to EUR 6.267 billion in 2003. COB/CEO Herbert Hainer declared, "Our teams, athletes and products took center stage at the years most exciting sporting events, and our Group delivered impressive sales growth as well as record gross margin and earnings."

Operating margin increased 110 basis points to 9.0% Net borrowings reduced by EUR 352 million. The company also had the highest year-end backlog growth in two years. In North America, backlogs increased 7% on a currency-neutral basis (flat in euros), supported by growth in both footwear and apparel. Adidas currency-neutral backlogs in Asia increased 44% (+39% in euros), underpinned by increases particularly in China and Japan.

Brand Adidas was the driver of the Group's sales growth. Revenues increased 8% on a currency-neutral basis, mainly due to improvements in the Sport Performance division, in football and all major apparel categories. Salomon sales grew 2% on a currency-neutral basis with increases coming from both the winter and summer sports categories. The apparel, cycling and nordic categories delivered a particularly strong performance. TaylorMade-Adidas Golf sales grew by 5% on a currency-neutral basis, driven by double-digit increases in the metalwood and apparel categories, as well as solid growth in footwear. Currency effects from a strong euro, especially versus the dollar, negatively impacted sales in euro terms. Adidas sales in euros increased by 5% to EUR 5.174 billion from EUR 4.950 billion in 2003. Salomon revenues declined 1% to EUR 653 million in euros versus EUR 658 million in 2003. TaylorMade-Adidas Golf sales in euros were down 1% to EUR 633 million in 2004 versus EUR 637 million in 2003.

Everlast FY04 Revenues Increased 13%

For FY04, Everlast Worldwide net revenues increased 13% to $45.0 million as compared to $39.8 million in 2003. The net revenue growth was achieved by a 36% increase in net licensing revenue to $9.1 million as compared to $6.7 million in 2003, along with increases in men's apparel and sporting goods revenues of $2.8 million, a 9% increase over 2003. Pro-forma earnings were $200,000, or 7¢ per basic share, as compared to $34,000, or $1¢ per basic share in 2003. Pro-forma EBITDA was $4.0 million in 2004 as compared to $2.9 million in 2003. Reported net loss available to common stockholders under GAAP was $1.0 million, or 33¢ per basic share in 2004, as compared to a $1.0 million loss, or 31¢ per basic share loss in 2003.

"The execution of our brand building strategy resulted in the achievement of record net licensing revenues in 2004 of $9.1 million, a 36% increase over 2003 levels. We expect our net licensing revenues to exceed $12 million for 2005, which will be a 33% increase over 2004 reported net licensing revenues. Since we acquired Everlast four years ago, we have grown our licensing revenues by over 300%. I am also pleased with the performance of our men's apparel business which grew 40% in 2004 over 2003 levels. This increase was partly a result of the strategic licensing and business alliance we entered into with Contender Partners, LLC, (a venture between DreamWorks LLC and Mark Burnett Productions) previously announced in the third quarter, resulting in a merchandising agreement with Foot Locker for a 'Contender' hang-tag line of Everlast sports apparel, shoes and equipment that we began shipping in October 2004. During the beginning of 2005, our men's apparel business continued to benefit from the tremendous exposure of its anticipated product placement on The Contender reality television drama, which recently premiered on NBC on March 7th. This exposure has enabled us to expand our market penetration by securing new product placement in sporting goods retail establishments such as Dick's Sporting Goods and Olympia along with department stores such as JC Penney," said George Horowitz, COB/CEO.

Famous Footwear Is Star At Brown Shoe

"Famous Footwear enabled us to achieve a solid fourth quarter. Full-year results for fiscal 2004, however, fell short of our expectations primarily due to weaknesses in several key areas of our Wholesale business and a poor performance at Naturalizer Retail," reported Brown Shoe COB/CEO Ron Fromm. "Looking at the full year, Famous Footwear's momentum built throughout the year, increasing its sales by 4.0% and operating earnings by 16.3%, as its new format and improved product offering began to gain favor with consumers. Within our Wholesale business, LifeStride, Dr. Scholl's and our women's private label businesses all showed improvements, but these gains were not enough to offset poor results at Naturalizer, Bass and our Children's business."

"Looking ahead, we believe Famous Footwear will continue its strong performance, and that the strategies we have put in place within our Wholesale division will lead to improved earnings results in fiscal 2005, starting with the first quarter," Fromm said. "We remain committed to continuing to invest in our platform in order to differentiate our Famous Footwear stores, build greater preference for our wholesale brands, deliver compelling product, strengthen our talent base, and further our enterprise-wide speed-to-market initiative to improve our global supply chain."

Dick's Closes 4Q04 With Earnings Of $43 Million

Dick's Sporting Goods reported 4Q04 net income, excluding merger integration and store closing costs, gain on sale of investment (GSI Commerce), and a lease accounting charge, of $43.4 million, or 81¢ per share as compared to earnings guidance of 77¢-78¢ per share. This compares to net income of $26.0 million, and EPS of 50¢ in 4Q03.

Including after tax merger integration and store closing costs of $7.5 million, or 14¢ per share, and gain on sale of investment of $6.6 million, or 12¢ per share and a cumulative lease accounting charge of $2.6 million, or 5¢ per share of which 1¢ per share was attributable to this year, Dick's reported 4Q net income of $39.9 million or 75¢ per share.

4Q includes an after tax cumulative lease accounting charge of $2.6 million, or 5¢ per share of which $471,000, or 1¢ per share relates to the current year. In connection with the recent attention placed on lease accounting, Dick's reviewed and discussed with its independent auditors, and concluded its lease accounting policy was not consistent with accounting standards. The company has changed this policy such that the commencement date of the lease term will be the earlier of the date rent payments begin or the date it takes possession of the property for the initial setup of fixtures and merchandise. Further, it is continuing to review with its auditors the accounting treatment of tenant allowances.

Total sales for the quarter increased 66% over last year to $788.0 million due to a comp-store sales increase of 1.1%, the opening of new stores and the inclusion of Galyan's operations in this year's quarterly results. Galyan's stores will not be included in the comparable-store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of 2Q05.

During 4Q, Dick's opened five stores and closed four stores (one Dick's store and three Galyan's stores) bringing the total stores opened for the year to 29 and the total stores closed for the year to six (three Dick's stores and three Galyan's stores). The stores that opened 4Q04 include: Easton, PA (the 2nd store in the Allentown market); two stores in Indianapolis, IN (the sixth and seventh branches stores in Indianapolis); West Mifflin, PA (the ninth store in the Pittsburgh market) and Portsmouth, NH. The one Dick's store that closed was in Cleveland due to its overlap with a Galyan's store, and the three Galyan's stores closed were all in Indianapolis. As of January 29, 2005, the company operated 234 stores approximately 13.5 million square feet, in 33 states.

Primoz Plestenjak is replacing former American Snowboard Division manager Brian Brand who left the company shortly after ispo to assume a US-based managing position. Plestenjak has been an avid snowboarder since 1990, also riding professionally for a stint of four years. After resigning from his pro-snowboard career he joined the R&D department at the Elan factory in Fürnitz, Austria, where he was soon to become the product director of both the Elan ski and snowboard collections.

Total US golf rounds played dropped 4.0% in January 2005 vs. January 2004, reported the National Golf Foundation. The drop is largely attributable to a decrease of 18.6% in the Southwest region, which was hit by record precipitation that triggered flooding and mudslides, and disrupted travel. The South Central region was also down 15.3%. In other places where a goodly amount of amount of golf can be played in January, Central/South Florida was up 0.3% and the Southeast was up 12.3%.

Recreational Equipment, Inc. plans to open a store in Raleigh, NC, in November 2005 at North Hills, at Six Forks Road near Interstate 440. The 25,500 square-foot, two-story branch will employ about 55 full- and part-time staff. North Hills is a former regional mall that has evolved into an exciting midtown district with a mix of housing, offices, a movie theater, restaurants and stores.

Standard & Poor's will add Finish Line to the S&P SmallCap 600, replacing Yellow Roadway. The change will be effective after the close of trading March 11.

Creditors of bankrupt Spiegel (Eddie Bauer) won court approval to sue KPMG LLP for alleged professional malpractice that cost the estate at least $100 million.

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Sporting goods industry
Product placement
Apparel manufacturing

Adidas AG
Everlast Worldwide Inc.
Adidas-Salomon Group

Famous Footwear
lease accounting
licensing revenues
currency-neutral basis

Herbert Hainer
Brown Shoe
George Horowitz
Brian Brand

 Breaking Headlines
Today's news...3/10/05
MARCH 10, 2005

Today's news...39/05
MARCH 09, 2005

Today's news...3/8/05
MARCH 08, 2005

Today's news...3/7/05
MARCH 07, 2005

Today's news...3/4/05
MARCH 04, 2005

Today's news...3/3/05
MARCH 03, 2005

Short news...3/2/05
MARCH 02, 2005

In this issue...2/28/05
FEBRUARY 28, 2005

Today's news...2/25/05
FEBRUARY 25, 2005

Late news...2/24/05
FEBRUARY 24, 2005

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